News

Company insolvencies soar as costs spiral

Contributor:Mike Cherry |
Published: 6 February 2018

Mike Cherry
1 February 2018

There has been a 4.2 percent rise in company insolvencies in 2017 to 17,243, and a rise in quarterly insolvencies for Q4 2017 to 4,382. Contributor Mike Cherry, National Chairman – Federation of Small Businesses (FSB).

Recent insolvency figures are a real concern and our research shows a record number of small business owners looking for an exit. One in seven entrepreneurs expects to sell, hand-on or close their business in the first quarter of 2018.

Inflationary pressure, disappointing domestic growth and flagging consumer demand are all weighing on the small business community. The proportion of small firms reporting a rise in operating costs is now at a five-year high. It’s an increasingly unforgiving environment to trade in and we’ve seen business confidence dropping steadily over the past year.

What these figures don’t reflect is the impact that the demise of Carillion is having on supply chains across the UK. We are working closely with the taskforce set-up to mitigate that impact and hope to see as many contracts reassigned as possible over the coming months. Sadly there will be jobs lost and firms forced to close as a result of the misjudged procurement choices and appalling late payment practices that preceded Carillion’s collapse.

If the Government wants to see insolvency numbers fall in 2018, opening up more public contracts to small firms and making a reformed Prompt Payment Code mandatory for large corporations would be a good place to start.